Turbulent Tariffs: Navigating the Uncertainty of Canada-U.S. Trade
New U.S. tariffs are shaking up cross-border trade, impacting Canadian businesses through higher costs, supply chain disruptions, and economic uncertainty.
What Is Going On?
Canada and the U.S. have a long history of integrated trade. The trading relationship has afforded both countries millions of jobs and plays an important role in both economies. Canada remains the largest purchaser of American goods by a considerable margin.
On April 3, 2025, President Donald Trump commissioned tariffs of up to 50% for countries around the world, including Canada (although Canada is partially exempt from some of these measures). The announcement iterated that goods compliant with the Canada-United States-Mexico Agreement (“CUSMA”) will be tariff-free. Currently, Canadian goods not covered under CUSMA will see tariffs of up to 25%. Canada, along with many other countries, has announced counter-tariffs in response.
What Does This Mean For My Business?
The tariffs and the counter-tariffs will impact both Canadian and U.S. businesses that are directly or indirectly involved in cross-border trade in various ways, including, without limitation, the following:
- Revenue Streams: Tariffs raise the cost of goods, which businesses may absorb to maintain competitiveness, reducing profit margins. Alternatively, businesses may pass the increased costs onto consumers, resulting in higher prices that can affect competitiveness and reduce demand.
- Logistics and Supply Chains: Tariffs, particularly those on auto parts, are likely to drive shifts in suppliers and manufacturers. Businesses may seek to increase U.S. content in automobiles and auto parts to mitigate the impact of tariffs. Additionally, tariffs threaten the logistics of raw materials, prompting businesses to diversify into markets outside the U.S. to reduce costs and dependency.
- Employment: The impact of the tariffs has already forced Canadian businesses to cut costs through terminations, reduced work hours and potential hiring freezes.
- General Economic Outlook: The tariffs put negative pressure on Canada’s economic growth by potentially increasing inflation. However, these changes to the market may lead some businesses to innovatively adapt and emerge stronger by capitalizing on the unpredictability.
What Should I Do To Protect My Business?
Global trade policies are in flux with new tariffs, retaliatory action and heightened international tension. For Canadian and U.S. businesses trading across the border, staying ahead of these changes and preparing to mitigate their effects will be key to minimizing disruptions and staying competitive.
Our legal team, with expertise in cross-border business law, immigration and employment law, knows how to protect your business. We can work with you to determine how the tariffs may impact your business and develop a tailored solution to protect you during these turbulent times. Reach out to us at info@langfordlaw.com. We’ve got you covered.